FACT Act of 2012

5/18/2012

Proposed legislation, Furthering Asbestos Claims Transparency (FACT) Act of 2012, takes aim at asbestos-bankruptcy trusts. If passed, the FACT Act would end the antiquated system currently in place involving claims made to bankruptcy trusts. Under the existing system, if a person develops an asbestos-related disease, he can ask for compensation from a plethora of trust funds established by bankrupt asbestos companies by filing a claim describing his alleged disease and asbestos exposure. Currently, these trust applications and settlements are held in strict confidence, so asbestos-bankruptcy trusts cannot compare claims to prevent fraudulent or duplicate filings. Compounding the problem, defendants in asbestos actions filed in state court seldom have access to the trust fund applications and settlement determinations- impeding their ability to ascertain the full breadth of a plaintiff's asbestos exposures and to obtain post-verdict set-offs. Members of the plaintiffs' bar, meanwhile, argue that their clients are entitled to the full protection of privacy - like any other settlement agreement. Now, the FACT Act of 2012 may quash this embittered debate over what is private and who is entitled to the asbestos claims information in the name of transparency and fraud prevention.

Recently, the U.S. House of Representatives held a public hearing on the FACT Act of 2012 (or HR 4369). The FACT Act is bipartisan legislation that will help combat fraud and abuse that plagues the asbestos trust system. First introduced by Representatives Ben Quayle (R-AZ), Jim Matheson (D-UT) and Dennis Ross (R-FL), the public hearing was informative and well-attended. Members of the plaintiffs and defense bar, in addition to a former data analyst and statistician from a bankruptcy trust, spoke at the hearing. The FACT Act promotes transparency by requiring asbestos-bankruptcy trusts to quarterly disclose information on claim payments and to cooperate in requests for information on claims made by third parties. Different trusts may then compare claims and to prevent fraudulent or duplicate filings. The FACT Act also protects individual claimant's sensitive personal information.

The FACT Act is designed to promote transparency in asbestos claims. It requires asbestos-bankruptcy trusts to issue quarterly reports to third parties. Reports would identify the plaintiffs' names, exposure allegations, and asbestos-related disease information. This is critically important because in many states this information is not readily discoverable. Historically, this has led to claims applications with exposure and disease allegations that are incongruent with allegations asserted in state tort law claims. Proponents, including former asbestos-bankruptcy trust employees, point out that most trusts have complex databases that are already capable of generating quarterly reports - making compliance with the FACT Act both manageable and cost-effective.

The FACT Act is a reasonable approach to reforming the asbestos-bankruptcy trust system that will not only protect the individuals for whom the trusts were originally established, but will level the playing field for defendants by providing information necessary to the defense of their claims. For more information on how your claims will benefit from this legislation, please contact David Governo at dgoverno@governo.com or Lonna Carter at lcarter@governo.com of the Governo Law Firm.


<back